L.B. Foster Reports First Quarter Operating Results
PITTSBURGH, May 2, 2011 /PRNewswire/ -- L.B. Foster Company (NASDAQ: FSTR), a leading manufacturer, fabricator, and distributor of products and services for rail, construction, energy and utility markets, today reported its 2011 first quarter operating results, including the following items:
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-- First quarter sales increased by $35.1 million or 42.8% due to a
strong sales quarter by Portec Rail Products Inc., as well as a 14.4%
sales increase in the legacy L.B. Foster business.
-- Gross Profit margin was 14.9%, 20 basis points better than the prior
year.
-- The Portec Rail Products business contributed a gross margin of
21.7% which, as expected, included charges from purchase accounting
related asset step-ups.
-- The legacy Foster margins were lower than the prior year due to a
weak first quarter in our precast buildings division, as well as
unabsorbed plant costs at our Grand Island, NE concrete tie
facility as a limited amount of production was concluded in the
first quarter and we began dismantling the equipment.
-- Selling and administrative expense increased $6.5 million, principally
due to the inclusion of the Portec Rail Products results.
-- First quarter net income was $0.7 million or $0.07 per diluted share
compared to $1.8 million or $0.17 per diluted share last year. Factors
negatively impacting net income for this quarter were:
-- The recognition of expense related to the sale of Portec inventory
that was written up to fair market value as of the acquisition date
resulting in increased cost of goods sold of $2.5 million ($0.17
per diluted share).
-- Acquisition related amortization and depreciation of
definitive-lived intangible and tangible assets stepped up to
market value of $0.8 million ($0.06 per diluted share).
-- LIFO adjustments were $0.4 million ($0.03 per diluted share)
unfavorable compared to the prior year.
-- Adjusted EBITDA was $6.5 million compared to $5.0 million in the prior
year quarter.
-- First quarter bookings were $163.8 million compared to $106.1 million
last year, an increase of 54.4%. Excluding Portec, bookings were 27.3%
higher than last year. At quarter end, our backlog was $237.1 million,
15.8% higher than the prior year (4.9% without Portec).
Stan L. Hasselbusch, L. B. Foster's president and chief executive officer, said, "Our performance in the first quarter, which is traditionally our weakest quarter due to seasonality, was negatively impacted by expenses related to the acquisition of Portec Rail Products, Inc. and to our Grand Island facility. The most significant of these costs, a $2.5 million charge to gross profit, is a non-recurring expense that relates to the requirement to write-up inventory purchased in an acquisition to net realizable value, which takes most of the margin away when it is sold. This negative adjustment has been completely flushed through our results in the first quarter and will not impact us the rest of the year." Mr. Hasselbusch went on to say, "Our margins were not where we wanted them as they were negatively impacted by the Grand Island shut down, a weak precast buildings performance and a disadvantageous sales mix as distribution sales increased by 25% while distribution margins declined by 120 basis points. With regard to the Portec acquisition, we have moved past an intense 120 day integration period and are planning to continue these efforts for the remainder of the year. We continue to see many promising opportunities in the friction management and Salient product lines and are excited about the long term prospects for these businesses." Mr. Hasselbusch concluded by adding, "As we move through 2011, we expect to continue to experience a highly competitive market environment and we also anticipate significantly extended delays before a new transportation bill is passed, but we are optimistic that the overall economy is improving. Our bookings and backlog are very strong and we expect this strength to be reflected in our results for the remainder of this year."
L.B. Foster Company will conduct a conference call and webcast to discuss its first quarter 2011 operating results and general market activity and business conditions on Monday, May 2, 2011 at 11:00am ET. The call will be hosted by Mr. Stan Hasselbusch, President and Chief Executive Officer. Listen via audio on the L.B. Foster web site: http://www.lbfoster.com, by accessing the Investor Relations page. The replay can also be heard via telephone at +1-888-286-8010 by entering pass code 17288494.
This release may contain forward-looking statements that involve risks and uncertainties. Actual results could differ materially from the results anticipated in any forward-looking statement. Factors that could cause or contribute to these material differences include, but are not limited to, an economic slowdown in the markets we serve; a decrease in freight or passenger rail traffic; a lack of state or federal funding for new infrastructure projects; an increase in manufacturing or material costs; and other factors contained in the Company's filings with the Securities and Exchange Commission. The Company urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the Company faces. The forward-looking statements contained in this press release are made only as of the date hereof, and the Company assumes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise.
L. B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(In Thousands, Except Per Share Amounts)
Three Months Ended
March 31,
---------
2011 2010
---- ----
(Unaudited)
NET SALES $117,104 $82,002
COSTS AND EXPENSES:
Cost of goods sold 99,638 69,929
Selling and administrative
expenses 15,696 9,190
Amortization expense 704 3
Interest expense 138 245
(Gain) loss on joint venture (87) 147
Interest income (56) (74)
Other expense (income) 87 (102)
116,120 79,338
------- ------
INCOME BEFORE INCOME TAXES 984 2,664
INCOME TAX EXPENSE 305 911
--- ---
NET INCOME $679 $1,753
==== ======
BASIC EARNINGS PER COMMON
SHARE $0.07 $0.17
===== =====
DILUTED EARNINGS PER COMMON
SHARE $0.07 $0.17
===== =====
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC 10,285 10,172
====== ======
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - DILUTED 10,401 10,315
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L.B. Foster Company and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2011 2010
---- ----
ASSETS (Unaudited)
CURRENT ASSETS:
---------------
Cash and cash items $58,884 $74,800
Accounts and notes receivable:
Trade 60,890 66,908
Other 956 2,789
Inventories 101,779 90,367
Current deferred tax assets 1,660 911
Prepaid income tax 1,203 972
Other current assets 2,525 2,535
Total Current Assets 227,897 239,282
------- -------
OTHER ASSETS:
-------------
Property, plant & equipment-net 47,130 46,336
Goodwill 44,369 44,369
Other intangibles - net 44,413 45,079
Investments 2,074 1,987
Other non-current assets 1,445 1,663
----- -----
Total Other Assets 139,431 139,434
------- -------
$367,328 $378,716
======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
--------------------
Current maturities on other long-term
debt $2,358 $2,402
Accounts payable-trade and other 51,814 45,533
Deferred revenue 11,460 16,868
Accrued payroll and employee
benefits 5,735 9,054
Other accrued liabilities 14,242 22,962
Total Current Liabilities 85,609 96,819
------ ------
OTHER LONG-TERM DEBT 1,103 2,399
----- -----
DEFERRED TAX LIABILITIES 12,065 11,863
------ ------
OTHER LONG-TERM LIABILITIES 11,274 11,888
------ ------
STOCKHOLDERS' EQUITY:
---------------------
Class A Common stock 111 111
Paid-in capital 46,849 47,286
Retained earnings 233,701 233,279
Treasury stock (23,090) (23,861)
Accumulated other comprehensive
loss (294) (1,068)
---- ------
Total Stockholders' Equity 257,277 255,747
------- -------
$367,328 $378,716
======== ========
L.B. Foster Company
Reconciliation of GAAP to Non-GAAP Financial Measures
L.B. Foster (Foster) reports its financial results in accordance with generally accepted accounting principles (GAAP). However, Foster believes that certain non-GAAP financial measures are useful in managing our performance. One such non-GAAP measure is Adjusted EBITDA.
Adjusted EBITDA, which Foster defines as net income before interest, taxes, depreciation, amortization and other non-cash charges (principally related to purchase accounting adjustments, such as the $2.5 million charge taken in the first quarter of 2011 related to the write-up of inventory owned by Portec to fair value less cost to sell on the date of acquisition) is used due to its wide acceptance as a measure of operating profitability before non-operating expenses (interest and taxes) and noncash charges (depreciation and amortization and other noncash charges). Additionally, Adjusted EBITDA is one of the performance measures used in Foster's debt covenant calculations and incentive compensation plan.
This non-GAAP financial measure is not a substitute for GAAP financial results and should only be considered in conjunction with Foster's financial information that is presented in accordance with GAAP. A quantitative reconciliation of GAAP net income to Adjusted EBITDA is provided in the table below.
Reconciliation of GAAP Net Income to Adjusted EBITDA
(Unaudited)
Three Months Ended
March 31,
2011 2010
---- ----
($ in thousands)
Net income $679 $1,753
Income tax expense 305 911
Interest, net 82 171
Depreciation and amortization 2,939 2,163
EBITDA, Non-GAAP 4,005 4,998
Adjustments or charges
Difference between net
realizable value and cost basis
of 2,493 0
inventory sold due to purchase
accounting step-up
Adjusted EBITDA $6,498 $4,998
====== ======
Contact:
David Russo Phone: +1-412-928-3417 L.B. Foster
Email: Investors@Lbfosterco.com 415 Holiday Drive
Website: http://www.lbfoster.com Pittsburgh, PA 15220
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